Unlimited leverage, compliments of the US government

Discussion in 'Economics' started by Financial Saint, Apr 14, 2010.

  1. J.P. Morgan chase have announced better than expected earnings at 74 cents per share while average expectations were 65 cents per share. Total revenue rose to 28.2 billion, while average expectation was 26.5 billion. They have only lost 7 billion dollars in nonperforming loans. I guess the reason why banks are not losing as much money on nonperforming loans (couple of days ago I heard an announcement that we have the highest foreclosure rate since they have been following the data) is because the US government has been buying those toxic loans. I guess the easiest way to explain this is that the banks first have pulled the hot potato out of the oven and then have passed the potato to the US government and now the US government is passing the hot potato to the tax payers. Well the US government can take unlimited amount of leverage as long as the tax payers can pay for the margin call.

    There is nothing to worry about, the economy is growing and we are about to announced the creation of 400,000 jobs for month of April. Or maybe there is a little problem bubbling up. Did we learn anything from the past? That every time we had a period of low interest rates there was an economic prosperity but it is always followed by some type of huge bubble and the most recent one has almost devastated the entire economy and financial system of the US.

    This is just my humble opinion
  2. S2007S


    What I think they are trying to do is float the economy as much as they can until nearly every troubled area is fixed, it seems as of now its working out great, they are batting 999% right now. Who knows what happens after this crisis is out of the way, I mean if the banks are pulling in these kind of numbers during one of the biggest downfalls in our economy what is going to happen when the economy is rolling once again, I mean these companies are bigger and better today then they were before the crisis even started, its really as if this crisis came and went in a few short hours. Something doesn't feel right about how they are patching up this economy at the moment.
  3. TGregg


    Instead of Pass the Hot Potato, I'd call it Hide the Giant Greasy Sausage. :D
  4. Hi guys,

    I think I need to change the name of the post from: Unlimited leverage, compliments of the US government to " Unlimited leverage, compliments of the US tax payers"